1996 (6) TMI 181 - AT - Central Excise

Summary

Issues:
Interpretation of Notification No. 201/79-C.E regarding duty exemption for motor vehicle parts under T.I. 68 and applicability of set off benefits for goods cleared under Chapter X procedure.

Detailed Analysis:

1. Facts and Background: The case involves the appellants manufacturing motor vehicle parts under T.I. 68 and clearing a part of these parts under bond for further manufacture. The Assistant Collector issued a show cause notice denying the set off benefits under Notification No. 201/79-C.E, leading to the appeal.

2. Appellant's Arguments: The appellants argued that their goods are not wholly exempt from duty, and the exemption under the notification should apply. They emphasized that duty liability shifts to the purchaser in cases of clearance under bond and highlighted the need for interpreting the term "exempted from the whole of the duty of excise" in the notification.

3. Collector's Decision: The Collector rejected the appellant's plea, stating that the goods are not wholly exempt from duty, and the set off benefits are limited to the duty already paid on inputs. The Collector emphasized strict interpretation of the notification and the regulatory provisions outlined in the Appendix.

4. Legal Arguments: The appellant's advocate cited precedents like the J.K. Synthetics case to argue against the Collector's decision, emphasizing the lack of correlation requirement between inputs and final products. They also referred to the Delhi High Court's ruling in Goodyear India Ltd. to support their stance on the utilization of Modvat credit.

5. Tribunal's Decision: The Tribunal analyzed the conflicting arguments and previous judgments, including Vikrant Tyres Ltd., to conclude that the set off benefits do not apply to goods cleared under Chapter X procedure. The Tribunal upheld the Collector's decision based on the specific provisions of Notification No. 201/79 and the second proviso therein.

6. Final Order: The Tribunal, concurring with the Collector's decision, rejected the appeal, citing the applicability of the Vikrant Tyres Ltd. judgment and the specific conditions outlined in Notification No. 201/79. The Vice President also supported this decision, emphasizing the self-contained nature of the notification and the lack of relevance of proforma credit or Modvat in this context.

7. Conclusion: The judgment clarifies the scope of duty exemption and set off benefits under Notification No. 201/79-C.E for motor vehicle parts and highlights the importance of adhering to the specific conditions and provisions outlined in such notifications.